The passing of the enacted reconciliation bill (i.e., One Big Beautiful Bill Act of 2025) and accompanying Executive Order have created a rapidly changing landscape for commercial solar energy in the U.S.
Under the reconciliation bill, commercial solar projects must begin construction by July 4, 2026, and be placed in service by December 31, 2027, to remain eligible for the full Investment Tax Credit (ITC). Additionally, the Executive Order calls for stricter enforcement of “beginning of construction” rules, requiring substantial physical work on-site rather than relying on preliminary steps like contracts or initial procurement.
Compounding the urgency, new Foreign Entity of Concern (FEOC) rules will take effect, introducing restrictions on supply chains tied to certain foreign manufacturers, including many based in China. Projects using components sourced from FEOCs could lose tax credit eligibility, making it crucial for developers to reassess suppliers immediately.
Important Factors to Maximize ROI:
- Start construction activities as soon as possible: Begin concrete on-site work, such as foundation installations or major equipment deliveries, to secure eligibility under the stricter guidelines.
- Audit supply chains thoroughly: Transition to domestic or approved suppliers to avoid FEOC-related disqualifications and ensure tax credit compliance.
- Accelerate permitting and interconnection processes: Work closely with local authorities and utilities to secure approvals quickly and prevent delays.
- Build investor and stakeholder confidence: Provide clear project timelines and milestones to mitigate uncertainty and secure continued financing.
- Maintain detailed documentation: Keep meticulous records of construction progress, procurement decisions, and compliance measures. These will be essential during audits to confirm tax credit eligibility.
According to estimates by the Princeton University-led REPEAT Project, the changes introduced by the reconciliation bill and the Executive Order could reduce clean energy investment by as much as $500 billion over the next decade. However, proactive developers who move quickly still have the opportunity to take advantage of the current tax incentives before they are further curtailed.
By taking decisive action today, businesses can not only secure valuable tax benefits for their commercial solar projects but also establish themselves as sustainability leaders while fixing their long-term energy costs, potentially saving and gaining a competitive edge in the market.
For more detailed updates and resources, contact our team directly.
Reach out today to get your project under construction and optimize your ROI and tax credit benefits.
